It was another blow out quarter from Guardant (GH). FY20 revs were guided above estimates, but not by a ton (clearly conservative in our view). However, the stock suffered in reaction from a combination of a larger-than-expected net loss and very difficult market conditions.
Management was probably thinking: how did we end up putting out our Q data in the afternoon straddled by the worst two-day stretch for the overall market in years! But, that's life as a publicly traded company. We wouldn’t read too much into the reaction.
In the big picture, Guardant Health (GH) may have had limited upside potential, even with the clearly conservative 2020 revenue guide and the larger than expected net loss forecast weighing on things. The reality here is we were dealing with a 30x multiple on sales. While the long term story remains very attractive, valuation issues and market conditions demanded an almost absurdly perfect report to avoid some sort of post-report unraveling.
Guardant Health Inc (NASDAQ:GH) bills itself as a precision oncology company that provides non-invasive cancer diagnostics. It offers liquid biopsy tests for advanced stage cancer, such as Guardant360, a molecular diagnostic test that measures various cancer-related genes from circulating tumor DNA (ctDNA); and GuardantOMNI, a broader panel measuring various genes from ctDNA.
The company also provides LUNAR-1 for recurrence detection in cancer survivors; and LUNAR-2 for early detection of cancer in higher risk individuals. Guardant Health, Inc. was incorporated in 2011 and is headquartered in Redwood City, California.
Guardant Health is an oncology company and developer of proprietary blood tests and analytics to improve cancer outcomes.
The company believes that the key to conquering cancer is its molecular information, which GH enables by a routine blood draw, or liquid biopsy. Guardant has launched its liquid biopsy tests, Guardant360 and GuardantOMNI, for advanced stage cancer.
Our GH Earnings Summary:
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Reports Q4 (Dec) loss of $0.27 per share, $0.03 better than the S&P Capital IQ Consensus of ($0.30); revenues rose 91.2% year/year to $62.9 mln vs the $54.87 mln S&P Capital IQ Consensus.
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Co issues upside guidance for FY20, sees FY20 revs of $275-285 mln vs. $273.86 mln S&P Capital IQ Consensus.
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Net loss is expected to be in the range of $155.0 million to $160.0 million in 2020.
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Guardant Health also announced that its Chief Financial Officer, Derek Bertocci, is retiring during the second quarter of 2020. He will continue to serve in his current role until a successor is hired and plans to remain at Guardant Health and support the company during this transition.
Our GH Conference Call Notes:
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Analysts suggest revenue guidance is conservative. 2020 will see more organic growth vs. big ASP tailwind from reimbursements in 2019. Adoption still in early innings.
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Sees (typically lumpy) biopharma contribution to be lighter in Q1 with significant growth over LT. Sees local coverage determinations (LCD) benefit starting in Q2.
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GH also guided for a larger than expected net loss -- investing in significant growth opportunities for LT.
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Active discussions with FDA for G360 FDA certification -- going in the right direction.